“The draft budget for the next year cast three challenges to local self-government. The first one is the change of the reverse subsidy formula from 50/50 to 80/20. The second challenge is an attempt to transfer the funding of various compensations to local budgets. And the third one is the medium-term loan”. This is how Oleksandr Slobozhan, executive director of the Association of Ukrainian Cities, began his speech on the air of the “Time of Opportunities” programme on the “5^th Channel”. The conversation was based upon these three problems.

“What does the reverse subsidy formula mean in case of Zhytomyr?” said Serhiy Sukhomlyn, Zhytomyr city mayor. “This year, according to the 50/50 formula UAH 32 million were withdrawn from the city budget. And according to the 80/20 formula, UAH 84 million should have been withdrawn. This is a very big sum for us, as the city budget is about UAH 250-350 million per year. The transfer of transportation compensations from the state to the local level cost us UAH 70 million, and the transfer of vocational schools financing went for UAH 90 million. Fortunately, after negotiations with the Association of Cities, the Ministry of Finance has drafted a decision that will somewhat increase the basic level of hromada revenues, upon achievement of which the reverse subsidy formula should be applied. If this level is increased, not a single hryvnia will be deducted from the budget of Zhytomyr and most oblast centres of Ukraine next year. This will be a step towards cities of oblast and rayon importance...”

The programme went on the air with the assistance of the Swiss-Ukrainian project “Decentralisation Support in Ukraine” (DESPRO)